Price of gold unlikely to rebound

The price of gold has fallen by almost a third from its
record high of nearly $1,900 an ounce in August 2011 to around
$1,300. Market participants maintain that adding gold to a
portfolio provides insurance against economic and financial
shocks – but such volatility and price declines
represent a risk of their own.

During times of financial downturn and economic uncertainty,
investors typically increase their demand for gold due to its
perceived safe-haven qualities. The flipside is that when the
outlook becomes more positive, investors desert safe havens in
search of returns.

The price is therefore determined by the same
fear-versus-greed dynamic as paper assets, but with the price
moving inversely.

A precious metals trader says: "The crowd will determine
where we are at the end of 2014, price-wise. There is the
potential for one more decent down leg before a resumption of
the secular bull market that...

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